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The Under $100k Buyer. Going…Going…Almost Gone

by John Rice

HELLO UNDER $100,000 BUYER…….ARE YOU OUT THERE????

I don’t think you are, and I don’t blame you.  With prices and interest rates so low, why settle for a $90k three bedroom, one bath house without a garage when for only $143 more a month you can get not only a newer house, but one with an extra bathroom and a garage?

Between the listings I have and from watching the under $100k market every week, I think it is safe to say that few people are looking under $100k right now that aren’t investors.  I have one of the best $90k houses I have ever seen listed right now.  I didn’t expect it to take 45 days to sell.  We finally got an offer though, and a good one at that.  Every week I scroll through all the new listings, pending sales, and sold listings from $0 all the way up to $550k.  Most of the under $100k ones are foreclosures that get bought by investors.  The $100-150k is super strong at the moment.

Let me flash back to 2005-2006.  Back then, realtors dreaded a buyer who said their peak price point was $100k.  There just wasn’t much out there back then for that kind of coin.  Today, $100-125k seems to be where most of those buyers land.  Whip out your mortgage calculator and you’ll find that the payment is the same at today’s 4% rate for a $125k house as it was for a $100k house at 6% back then.

We all know that the higher end houses have suffered the most with values over the past several years, but I am now worried about the lower end.  Who would have ever thought that record breaking affordability would mean that nobody wants the most affordable houses there are??

Lexington Ky Neighborhood Video Tour by the LEXpert: Cool North LEX streets

by John Rice

Okay.   I normally do these videos about well rounded neighborhoods that will be easy to sell when it is time for you to fire up your exit plan.  Not the case today.  Today’s video is about cool older places on the north end of Lexington.  The schools aren’t rated all that well.  There is not that good of shopping around, but hey, just like love,  sometimes you throw out all logic and go with your heart.

I would not hesitate to suggest these streets to any of my clients, or even live there myself.  These streets are kind of a niche market.  That doesn’t mean the values aren’t stable, it just means it might take you a bit longer to sell since they don’t have as broad of an appeal as say, a newer home on the south end of town.  If these streets were cars, they’d be more like a Subaru Outback, a Volkswagon Passat, or Mini Cooper rather than an Accord or Camry.

If you’re somebody that follows your heart more than your head when it comes to real estate, I think you’ll enjoy the video.  If you’re local and have never been on these streets, go check them out!

 

No showings? Showings, but no offers? Here’s why

by John Rice

Since I’ve got a bunch of listings now, I thought it would be a good time to do a post about what you can deduce from your showings.

Sooooooo…….

IF you aren’t getting any showings:  More than likely your price is too high.  It could also be your realtor, but as much as I hate to confess this, a house that is priced well seems to sell even if the agent is lame at presenting it online.  If all the data on the listing is correct (schools, size, neighborhood, zip code, etc) more than likely you aren’t getting showings because buyers and agents can tell just from what they see online that the price is too high.  Now, if you have a gazillion dollar house or something very unusual like a 3000 square foot tree house on 10 acres in the middle of downtown, you aren’t going to get many showings anyway since the buyers for those properties are few and far between.

IF you get showings, but no offers:  This is a little more tricky.  Let’s assume that the house is presented accurately online……meaning no creative tricks like hiding the fact that the house backs up to a McDonald’s drive-thru, or that there is a toilet in the middle of the dining room.  If there are no shenanigans, that means the buyers and agents feel that the house is probably priced realistically from what they see online, but the house doesn’t meet their expectations once they get there.  It’s usually something they didn’t expect like the floor plan or the condition of the house.  This is where you have to listen to the feedback.  I know this sucks to hear for a seller, but if 7 out of 10 buyers didn’t like the house due to pink carpet in the bedrooms or the like, you are going to have to address that or wait around for a pink carpet lover to show up…..and in all my experience, I have not met that buyer yet.  You need to change what you can to make it palatable for the buyers, even if you don’t understand it nor agree with it.  Yes, carpet is easy to change for the buyer, but few will do it, and it is just as easy for you.  Yes, you don’t know what color a buyer will want, but we know it ISN’T pink, so that’s a start.  If the feedback is something you can’t change, like a steep driveway, your only option is to reduce your price to the point where a buyer gets more excited about the price than they are disappointed in the slope.

Bottom line is that you want to make adjustments to make your house one of the best ones on the market.  A buyer will always pick the best house they can get, may as well be your’s.

Playing “Bang for Your Buck” & it took longer than 30 minutes!

by John Rice

Ever watch that show on HGTV called Bang for Your Buck?  Let me let you in on a secret…..the winning house is ALWAYS going to be in a neighborhood that will best absorb the amount of money invested on whatever the improvement was.

I recently had a chance to play “Bang for Your Buck” with a client, only they were wanting to pick the house that had the best change to have been the winner.  They narrowed down their short list to about 8 houses.  I ran the comps, took what I knew about the neighborhoods and the market, and told them which ones would be the best bet to get back the $20-30k they want to spend on improvements.  Of the eight houses, most were at or near the top of the range for their neighborhood.  That never works for getting anything back on your improvement dollars.  If the range for the neighborhood is $150-200k, you can spend a million bucks on a house, but you aren’t going to get much more than $200k for it.  See, once you over-improve a house, you end up making buyers pick between the best house in an inferior neighborhood or an average house in a superior neighborhood…….and sometimes those people have a realtor like me who will tell them they can improve any house, but they can’t do a ding dang thing to change the whole neighborhood!

So, my folks picked a house in the lower end of a neighborhood that ranges from $200k up to well over $500k.  That should give them the room they need in the value range to get back most or all of the money they spend.  It is also in an area where it is the preferred neighborhood due to character and school district.  You’ve got to consider what other neighborhoods any future buyers may also consider.   We ruled out several good houses just because there were so many similar neighborhoods all in the same part of town.  In fact, we saw about 10 houses that were all pretty much the same floor plan within a quarter of a mile from each other.  You don’t want a future buyer to be playing “Where’s Waldo” with your house when it is time to sell!

 I also gave them some ideas for what would be the best things to do to the house.  Pretty much, what you want to do is offer a buyer just a little more than what they expect to see in your neighborhood.  Some people (and amateur Flippers) go over board.  I think I blogged about a Flipper who put granite and travertine all over a house in a neighborhood where 30-year-old laminate was typical.  That dude could have done just as well with a nice new laminate counter top and 89 cent tile.  Sure, who doesn’t like granite and travertine, but it was wasted money from an investment standpoint……especially since his higher material cost drove up his asking price and he couldn’t sell it.

Here are some things that never go out of style:

-Adding a fireplace

-Hardwood Flooring

-Crown Molding

-Plantation Shutters

-Adding a deck or patio or making the one you got larger

-Fencing a yard

-Landscaping

For things that a buyer will want to rip out in 10-20 years, (tile, counter tops, backspashes, carpet, light fixtures, cabinets, etc) you are only going to get a return on your investment as long as what you bought is not only still stylish, but in good condition.  For example, when your maple glazed kitchen cabinets are beat to heck a few years down the road, don’t expect a buyer to pay you back for them.  And in 15 years, they don’t add any value.

If you can’t tell, I really want my own reality show.

FOR SALE: A worn out house that stinks……Hurry. Won’t Last!!

by John Rice

So, I’m out showing several houses to some clients of mine this week.  We roll up to a house where we knew the seller had several small children.  The dad is waiting in the van with the kids.  I can see the mom scurrying around inside opening blinds, turning on lights and trying to do all she could to make the most out of the showing.  The dad gets out of the van and apologizes to us.  Dude really looked stressed out.  Then the wife comes running out of the house.  She looks just as frenzied as he did.  We go in the house and before they have even left the street we are ready to leave.  Want to know why?

The house sucked…..That’s why.  Who wants to buy a house that looks bad when there are ones for sale that look good?  It’s that simple.  When we walked in, the house smelled, we saw walls that had seen a lot of wear and tear since they were last painted, and the paint job wasn’t that good to begin with.  There were 5 different flooring colors upstairs.  The laminate flooring had been installed very poorly.  Bottom line, we couldn’t come up with one good thing to say about the house other than that it was in a good school district.  That was barely enough back in 2005, but doesn’t cut it at all in 2011.  Not trying to be mean to these people.  They seemed very nice.  I wouldn’t mind hanging out with them in their house if I knew them, but there is no way I would buy it…..and guess what, nobody else will either unless they make it attractive to buyers by improving presentation or reducing the price.

What gets me is having watched all the effort they put into the showing for us.  I could tell they really want to sell.  So, if the seller of this house were to read this, my advice would be to paint everything, fix the botched flooring, and to clean clean clean or drop your price to about 90% of what the comps show the potential value to be.  Your choices are sell for cheap or work on presentation……There is just no getting around the fact that there are several better houses for sale at a similar price all over town.   I guess a third option would be to change the way a buyer’s mind works when they look for a house, but I think working on your house would be easier!